Dollar rises as Powell sticks to dovish policy, risk currencies drop

The dollar firmed near three-month highs on Friday after rising overnight as Fed Chair Jerome Powell stuck with dovish policies despite a recent surge in bond market volatility.

The dollar surged the most in a month after Powell reiterated the central bank’s commitment to ultra-dovish monetary policy until the economy fully recovers.

Risk currencies, along with the Aussie and the kiwi, fell as investor sentiment soured. The safe-haven dollar was boosted by higher Treasury yields and risk-aversion sentiment. 

The dollar index steadied at 91.660 in early Asian trade following a 0.7% gain overnight. The euro fell 0.1% to $1.19635 after dropping 0.7% overnight.

The dollar fell to 107.835 against the yen. The Aussie slid 0.3% to $0.7705, extending its 0.7% decline on Thursday. The kiwi lost 0.2%, adding to its overnight decline of 0.8%.